Procurement

Public Fleets Become Cooperative to Save on Parts

January 26, 2015
• by Daryl Lubinsky

Photo courtesy of City of Moline

The numbers don’t lie when it comes to government fleets benefiting from cooperative purchasing. Fleet manager J.D. Schulte shared a cooperative purchasing contract that his fleet at the City of Moline, Ill. secured for Bridgestone-Firestone tires.

At a Glance

Cooperative purchasing for vehicle and equipment parts have resulted in savings for government fleets. Some examples:

One cooperative contract that the City of Little Rock, Ark. participated in resulted in a tire purchase for half the price.

The City of Moline, Ill. participated in a joint purchasing contract for tires that showed discounts of 15-46%.

“It says right here, ‘Discount is off the current government pricing catalog,’ ” Schulte said. “They get national contract pricing extended out to us as local agencies, and it’s a 46.5% discount off the current government pricing catalog.”

That’s just one example. Renee Tyler, special program coordinator who manages the acquisitions and parts division for the City of Little Rock, Ark, secured a discount on tires through the Arkansas State Procurement Contract. Her department purchased approximately 2,839 tires in 2014 for $576,706.31 using the government contract, which is a savings of more than $260,000. She explained that the agencies providing the cooperative purchasing contracts can submit bare bones pricing to the government entities that participate in cooperative purchasing because the high volume of product sold leads to profit for those selling agencies. When explaining the advantage of ­cooperative purchasing for government fleets, Tyler keeps it simple:

“You save money,” she said. “I would encourage any fleet, if you can utilize one of the cooperatives, utilize them because it’s very difficult to find an outside vendor, even in the bidding process, that can undercut the state procurement contract.”

Tyler, Schulte, and other government fleet managers are securing substantial discounts off regular prices that government agencies normally pay for tires, belts, hoses, and various additional parts for vehicles and equipment.

Little Rock, Ark.: 3 Co-ops Provide Big Savings on Parts

Tyler’s acquisitions and parts division at the City of Little Rock is responsible for equipment replacement and parts inventory. Maintaining an adequate stock of parts to ensure timely repairs and decreased unit downtime are among the division’s responsibilities. The city’s fleet of 1,450 units includes 946 motorized vehicles, 486 emergency first response units, and 534 pieces of equipment including trailers, concrete mixers, grinders, and salt spreaders.

The parts room includes more than 26,000 stocked parts. Tires are the main item that the city purchases through the cooperatives, and Tyler provided an example of a Wrangler tire No. LT245/70R17 with a retail price of $297.19. Her fleet’s cost through a cooperative contract was $148.60. A Wrangler tire numbered 315180R225, which carries a $1,296.90 retail price, cost $700.16 for her fleet.

The city uses three resources for its cooperative purchasing: the Houston Galveston Area Council (HGAC), the National Joint Powers Alliance (NJPA), and the Arkansas State Procurement Contract. The HGAC describes itself as a regional organization “through which local governments consider issues and cooperate in solving area-wide problems.” Cooperative purchasing is one of its programs. But Tyler says the ­various ­cooperatives operate similarly. The main difference is that one cooperative might offer a part that another does not. Or certain vendors might use one co-op and not another.

She recommends a fleet contact its own finance department to set up the ­cooperative purchasing agreement. Once that agreement is in place, the fleet manager can simply log on to the co-op’s Web site to participate. The sites are easy to use. “If you do online shopping, you can utilize cooperatives,” Tyler said. A fleet manager using the site simply finds the part he or she needs and then gets in touch with the contact person listed to purchase the part. The vendor honors the listed price with no haggling and ships the part. Tyler has never had a problem with a vendor. She was asked to describe other interesting aspects of the program.

“What’s interesting to the fleet manager is saving money,” she said. “That right there is the selling point. It will save you thousands of dollars.”

City of Moline, Ill.: Joint Purchasing Means Buying Power

The City of Moline, Ill. participates in various state and national joint purchasing, or cooperative purchasing, contracts. Schulte received substantial discounts on tires, filters, wiper blades, and various additional parts. He and his staff of about 11 manage a centralized fleet of about 180 on-road and 200 off-road pieces of equipment and handle all procurements and disposal.

Various cooperative purchasing organizations are located in Illinois, including the Northwest Municipal Conference and the Suburban Purchasing Cooperative. Suburban represents 140 municipalities and townships in northeastern Illinois. Participants include municipalities, townships, counties, park districts, libraries, school districts, and non-profit organizations.

Schulte showed a recent joint purchasing contract for tires, with discounts of 15-46%, and he explained that the State of Illinois made the contract available to political subdivisions of the state, such as the City of Moline. Like Tyler of Little Rock, Schulte noted that price is the big advantage to the contract. Buying power comes from the fact that so many entities, including all the various state departments and municipalities, participate in the contract, driving down the price.

How much work is involved in securing the low prices from cooperative purchasing? “I don’t think we consider it work,” Schulte said. “That’s kind of what our job is, to drill down and find the best pricing.” Doing that involves research and price point comparisons to local vendors to make sure his organization is getting the best price.

To find a good cooperative, Schulte advises organizations find other entities with similar equipment and find out what co-ops they are using.

Minnesota Co-op Provides Access to 800+ Contracts

Brenda Willard, as assistant director of the Minnesota Materials Management Divsion, is part of a team that draws up cooperative purchasing contracts for various goods and services in addition to fleet. One of its programs, the Cooperative Purchasing Venture (CPV), includes parts contracts for vehicle fleets. Willard’s team, part of the Minnesota Department of Administration’s purchasing and contracting division, creates the contracts and invites government agencies to participate in the CPV. Those agencies can include cities, counties, school districts, universities, and other states.

“What we’re trying to do is deliver value to those smaller governmental entities like the cities and counties,” said Adam Giorgi, communications specialist for the Minnesota Department of Administration. “Their staff resources or purchasing power might be more limited, so we offer these really proficient state resources.”

About 1,500 member entities participate in Minnesota’s CPV program. The cooperative purchasing program is optional, but state legislation passed in 2009 required entities to at least consider Minnesota’s CPV contracts to get the best value.

Willard noted that the program is free. “It used to be that we had a fee for it, but we changed it quite a long time ago to make it no cost for any entity. All they have to do is fill out the forms.”

Like the programs mentioned in this article from Moline, Ill., and Little Rock, Ark., signing up for the program is easy. Eligible organizations receive a password, which gives them access to more than 800 state contracts. Orders are placed directly to the vendor, with shipment direct to the purchaser.